1. Chapter 13 Motivation & Training1 Sales Management Chapter 13 Motivation and Training

2. Chapter 13 Motivation & Training2 Outline: Certain motivation theories in selling Apply motivation in practice Set sales targets and quotas Organize suitable sales training programs and evaluate the usefulness

3. Chapter 13 Motivation & Training3 Creating and maintaining well-motivated salesforce is not easy. In some industries, salespersons would easily suffer from low morale and confidence because rejections may greatly outnumber successes, I.e. insurance, investment consultant, road-shows products etc. Motivation is an essential method to keep up working effectively. One of the roles of sales manager is to motivate salesforce, or provide the circumstances that will encourage salesforce to motivate themselves. Motivation

4. Chapter 13 Motivation & Training4 1. Maslow ’ s hierarchy of needs http://www.ship.edu/~cgboeree/maslow.html Motivational Theories

5. Chapter 13 Motivation & Training5 Maslow’s hierarchy of needs Physiological Needs needs for oxygen, food, water, and a relatively constant body temperature. They are the strongest needs because if a person were deprived of all needs, the physiological ones would come first in the person's search for satisfaction. Safety Needs When all physiological needs are satisfied, the needs for security can become active. Adults have little awareness of their security needs except in times of emergency or periods of disorganization in the social structure. Children often display the signs of insecurity and the need to be safe. Needs of Love, Affection and Belongingness When the needs for safety and for physiological well-being are satisfied, the next class of needs for love, affection and belongingness can emerge. Maslow assumes people seek to overcome feelings of loneliness, involves giving / receiving love, affection and the sense of belonging. Needs for Esteem When the first three needs are satisfied, the needs for esteem can become dominant. These involve needs for both self-esteem and for the esteem a person gets from others. Humans have a need for a stable, firmly based, high level of self-respect, and respect from others. When these needs are satisfied, the person feels self-confident and valuable as a person in the world. When these needs are frustrated, the person feels inferior, weak, helpless and worthless. Needs for Self-Actualization The needs for self-actualization is a person's need to be and do that which the person was "born to do." "A musician must make music, an artist must paint, and a poet must write." These needs make themselves felt in signs of restlessness. The person feels on edge, tense, lacking something, in short, restless.

6. Chapter 13 Motivation & Training6 A satisfied need is not a motivator of behavior. Therefore a salesperson who already receives a more than adequate level of salary, additional payments may have no effect on motivation A motivator for one salesperson may not be effective with another, so different salespeople will have different combinations of needs Effective motivation results from an accurate assessment of the needs of the individual salespeople under the manager’s supervision E.g. - motivated by building their confidence. - How to motivate salesperson who’s great need for esteem but working performance is not good?—By announcing his/her poor sales performance to colleagues in a sales meeting How’s Maslow’s theory related to selling in practice?

7. Chapter 13 Motivation & Training7 2. Frederick Herzberg’s Dual Factor Theory 2. Frederick Herzberg’s Dual Factor ( Motivation-Hygiene) Theory Job satisfaction motivator includes: achievement recognition work itself responsibility advancement This theory has substantially contributed to the understanding of motivation at work, particularly extended Maslow ’ s theory to the work situation and highly the importance of job content factors.` There are two types of motivators, one type which results in satisfaction with the job (the motivators ), and the other which merely prevents dissatisfaction (the hygienes). Dissatisfaction hygiene includes: company policy/administration working conditions supervision interpersonal relations money status security Job satisfaction motivator includes: achievement recognition work itself responsibility advancement

8. Chapter 13 Motivation & Training8 2. Herzberg’s Dual Factor Theory 2. Herzberg’s Dual Factor Theory ( Motivation-Hygiene Theory ) Job satisfaction motivator includes: achievement recognition work itself responsibility advancement Hygiene, if applied effectively, can at best prevent dissatisfaction: if applied poorly, can result in negative feelings about the job. It is argued that salary should not be regarded as hygiene factor as salespersons are largely motivated by the high commission. However, Herzberg believed that high commission was a motivator through the recognition it gave to sales achievement. Herzberg believed that the degree of responsibility (authority to grant credit or discount, handling complaints etc) is highly related to the higher sales success.

9. Chapter 13 Motivation & Training9 3. Vroom’s expectancy theory Job satisfaction motivator includes: achievement recognition work itself responsibility advancement Assumes that a person ’ s motivation to put effort depends on his expectation for success Expectancy: relationship between effort and performance. e.g. increase effort -> higher performance Instrumentality: relationship between performance and reward. E.g. higher performance -> promotion Valence: a value placed upon a particular reward. E.g. promotion may be highly valued by some salespeople but not others.

10. Chapter 13 Motivation & Training10 4. Adam’s inequity theory Job satisfaction motivator includes: achievement recognition work itself responsibility advancement Feelings of inequity (unfairness) can arise when one ’ s effort or performance on the job is greater than the reward. Salespeople who feel they contribute more than others expect to receive greater rewards. Monetary rewards Workload Promotion Degree of recognition Targets Tasks The greater the inequities the salesperson perceive(feeling unfair), the lower the motivation Therefore sales managers must monitor their salesforce to detect any feelings of unfairness.

11. Chapter 13 Motivation & Training11 5. Likert’s sales management theory Job satisfaction motivator includes: achievement recognition work itself responsibility advancement The hypotheses that the sales managers ’ behaviour will affect the behaviour of the salespeople. I.e. high performance sales team usually had sales managers who had high performance goals. The management style such as close communication between salesforce and the managers, usually has a better outcome/productive than a monopolistic management style.

12. Chapter 13 Motivation & Training12 Motivation in practice --- Motivation factors Job satisfaction motivator includes: achievement recognition work itself responsibility advancement Financial incentives Commission may motivate salespeople through providing a direct reward for extra effort (Vroom) and by giving recognition for achievement (Herzberg) salary + commissions: provides a level of security plus higher earning for higher sales Straight commission : earnings entirely depend on achievement commission base Commission systems: - commission base e.g. sales revenue/profit commission rate - commission rate. E.g. % of all sales starting point for commission - starting point for commission e.g. at some predetermined sales level Commission can also comprise a given % of sales per salesperson/ group or % of sales revenue in excess of a sales quota (or other combination) Some companies introduce higher rates commission on higher-profit items (harder to sell). So commissions not only stimulate/motivate salesperson greater effort but also direct salespeople towards products particularly want to sell.

13. Chapter 13 Motivation & Training13 Motivation in practice --- Motivation factors Job satisfaction motivator includes: achievement recognition work itself responsibility advancement Promotion Merit-base promotional system can be a motivator. The best salesperson may not necessary be the best sales manager. Because the skills required of a sales manager are wider than those of a salesperson. A sales manager must be able to analyze, control, motivate and train salesforce. If the promotion is based on sales performance, try to consider a dual promotional route: managerial career sequence + reward outstanding sales success. e.g Salesperson -> Senior salesperson -> Account Executive -> Assistant Sales Manager other related position: key holder, shop manager, assistant area manager, area manager etc.

14. Chapter 13 Motivation & Training14 Motivation in practice --- Motivation factors Job satisfaction motivator includes: achievement recognition work itself responsibility advancement Sales Contests Encourage a higher level of sales Increase the sales of a slow-moving product or reward the generation of new customers Rules: -must appeal the competitive spirit of salespeople and to their needs for achievement / recognition. E.g. financial incentives, promotions -Must be fair -Must be attainable Limitation: -Cheating may occur. -Different cultural ideas and expectation

15. Chapter 13 Motivation & Training15 Motivation in practice --- Motivation factors Sales targets or quotas Must be fair Must be attainable and challenging Targets or quotas needed to consistent to company objectives Usually linked with financial incentives Sales managers needed to know the tactics of determining the targets according to the individual ability and the market situation.

16. Chapter 13 Motivation & Training16 Motivation in practice --- Motivation factors Meeting between manager and salespeople Meeting is a very good opportunity to motivate salesforce in person. Meeting allows sales manager to understand the personality, needs and problems of each salesperson Allow sales manager to understand the motivation and demotivation factor of salesperson. Sometimes manager and salesperson may have different perspective e.g. motivators: salesperson: fringe benefits manager: competition/ incentive based target setting demotivators: Salesperson:lack of advancement, security, long working hrs manager: supervisory relations and personal problems Meeting can serve as evaluation and training program and to improve sales technique and confidence Group meeting can motivate, according to Likert, a manager ’ s open style of meeting can encourage sales to discuss and share views and problem, which lead to a greater sense of group loyalty and improved performance. Meeting allows opportunity for performance feedback where weaknesses are identified and recognition for good work is given

17. Chapter 13 Motivation & Training17 Training Training can be carried out in two forms: Training new salespeople: 1.Training programmes 2.New salesperson works with an experienced salesperson and being observed how selling is done. Even an experienced salesperson also need to be trained periodically to refresh and further enhance selling skills and knowledge.

18. Chapter 13 Motivation & Training18 Training 1.Skill development One of the main objective of conducting training course is to develop selling skills of salesperson. New salesperson has to go through four stages in training: 1.Unconsciously unable--- Trainee doesn't think about skills 2.Consciously unable---Trained reads about skills but can ’ t carry them out in practice 3.Consciously able---Trainee is reasonably proficient in skills but has difficulty putting them all into practice 4.Unconsciously able---Trainee can automatically perform the task without thinking about it

19. Chapter 13 Motivation & Training19 Training 1.Skill development A successful training programme takes the trainee to the final stage (unconsciously able) when he/she can perform all of the skills at once and has the ability to control the selling situation. E.g. a new salesperson is trained to be competent when he/she can open an interview, identify customers needs, presentation and handle objections in a natural manner, and close the sale at right time with right technique.

20. Chapter 13 Motivation & Training20 Training 2.Components of a training programme 1 st categories: The company ’ s objective, history, policies e.g. what ’ s the flow of work, how ’ s the compensation system, how salesperson are evaluated etc. 2 nd categories:Product knowledge, competitors and their products e.g. how the products are made, product quality and reliability, product features and what benefits they bring to the consumer. Knowing the difference of the products between competitors products and company ’ s products. 3 rd categories: Selling procedure and techniques e.g. Selling preparation, selling procedures, how to deal with objections, concession, negotiation etc. (chapter 4, 5)

21. Chapter 13 Motivation & Training21 3.Methods Lecture Useful in giving information and principles, communication and discussion. Use visual aid such as distributing notes, PowerPoint, transparencies etc. 2. Films Useful supplement to the lecture in giving information, showing how a skill should be performed by demonstrating how the principles can be applied in a real selling situation. Stage of consciously unable 3. Role playing Move the trainee to the stage of being consciously able. Allows the trainee to learn by his/her own successes and failure in a buyer-seller situation. Feedback from other members and trainer is valuable. Trainee can also learn from other group member ’ s performance. Playback allows trainee to see the situation through the eye of a third person so problems are more easily recognized and accepted. 4.Case Study Appropriate for developing analytical skills. Trainees are asked to analyze situations, identify problem and make recommendations.

22. Chapter 13 Motivation & Training22 3.Methods 5.On job training Al l the previous training should be reinforced by the on job training. The experience gained by real-life selling situation with the evaluation and feedback provided by the sales manager enable the trainee moves to the final stage of learning skills--unconsciously able. The trainee should be able to do things automatically. Sometimes salesperson loses an order in the job training, e.g. argue with customer and unpleasant situation created. Sales manager should step in and handle the case in advance to avoid further dampened relationship with customer. Then sales person should do the assessment and review regarding the case with the trainee again. Manager can first ask the trainee to relate any aspects of the sales which could be improved upon to see if the trainee can realize that he/she has a weakness. Then the manager can suggest methods to overcome the problem.

23. Chapter 13 Motivation & Training23 4.Evaluation of the training Generally the effectiveness of the training course are evaluated by: Change in sales net volume Number in new accounts/customers gained Number of old accounts lost Ability improvement Gained in reputation of improved services or image.